Does Doing Freebies Get You More Work?

[Lxnxjxhx]

5 bids for a service call?

5 bids for a service call?

Only if there is a lot of money involved.
Otherwise I look in The Washington Consumer's Checkbook for a recommendation.

 

[aline]

How much money does Carl the Con Man make if I go down to the auto dealer and kick some tires?

Ever get on the phone and start calling insurance agents to compare premiums?

And I know we've all done this one: Fax a materials list to 3 supply houses, asking for a price. But only one is going to sell you the stuff.

You may think it's wrong, or it may rub you the wrong way, but it's called Free Enterprise.

If the customer is willing to bring their house out to my shop I'll give them a free estimate as well.
Or even fax me a print for that matter.
We go out and have to determine what it is they really want, design it for them and then provide the estimate.

We just need to quit calling them estimates and start calling them in home consultations.

 

[HighWirey]

How much money does Carl the Con Man make if I go down to the auto dealer and kick some tires?
Ever get on the phone and start calling insurance agents to compare premiums?
And I know we've all done this one: Fax a materials list to 3 supply houses, asking for a price. But only one is going to sell you the stuff.
You may think it's wrong, or it may rub you the wrong way, but it's called Free Enterprise.

The insurance part makes my head swim . . .

But faxing that list does too.
Sometimes the gear and lighting packages were specified. Sometimes it was a free-for-all. The EC who got 'the' quote was the one who was always current with that supply house.

Best Wishes Everyone

 

[petersonra]

Joe Customer makes two calls and one offers a "free" estimate and one wants a charge who do you think he gets to come out?

Getting work is a cost of doing business, be it advertising, free estimates, or joining the PTA. Somehow you have to get that work in the door. One of the reasons some companies do better than others is that they are able to spend very little to acquire the business they have, usually because it is happy customers coming back. happy customers are absolutely the cheapest and most reliable way to long term business.

 

[emahler]

Getting work is a cost of doing business, be it advertising, free estimates, or joining the PTA. Somehow you have to get that work in the door. One of the reasons some companies do better than others is that they are able to spend very little to acquire the business they have, usually because it is happy customers coming back. happy customers are absolutely the cheapest and most reliable way to long term business.

you have never run a business have you? let alone an electrical contracting business...let alone a resi service business...have you?

 

[bikeindy]

you have never run a business have you? let alone an electrical contracting business...let alone a resi service business...have you?

You got to love it, I had a guy working for me 4 years ago who was always telling me how to run a business. He is currently locked up for not paying his child support.

 

[romexking]

The thing that most consumers don't understand is that they pay for the "trip charge" or "free estimate" as long as they have the work done. Contractors that charge for the estimate just spread the cost of these estimates or trips to ALL of their potential customers with the customers knowledge. Other contractors (should) increase the costs to only the customers that actually use that particular contractor.

Sending out an electrician in a vehicle to give a "free" estimate costs the contractor money, there is no disputing that fact. The difference is how that cost is accounted for, and it is accounted for in some fashion. Even if you don't track the time, or increase prices to offset the estimating expenses, it is reflected in the bottom line of your P&L statement, whether you like it or not.

 

[petersonra]

The thing that most consumers don't understand is that they pay for the "trip charge" or "free estimate" as long as they have the work done. Contractors that charge for the estimate just spread the cost of these estimates or trips to ALL of their potential customers with the customers knowledge. Other contractors (should) increase the costs to only the customers that actually use that particular contractor.

Sending out an electrician in a vehicle to give a "free" estimate costs the contractor money, there is no disputing that fact. The difference is how that cost is accounted for, and it is accounted for in some fashion. Even if you don't track the time, or increase prices to offset the estimating expenses, it is reflected in the bottom line of your P&L statement, whether you like it or not.

This is not much different than the carpet company sending out a salesman to give you a free estimate for new carpet. People just don't sign a blank check and tell you to come do some work on my house. They want a defined scope of work with a specific price. That is not always possible, but its what most consumers want.

 

[petersonra]

you have never run a business have you? let alone an electrical contracting business...let alone a resi service business...have you?

Are you suggesting I am wrong? that happy customers are not the best source of business? I would suggest that if your business is not getting a substantial percentage of its business from repeat customers, you are doing something very wrong. Almost all successful businesses operate that way.

 

[emahler]

Are you suggesting I am wrong? that happy customers are not the best source of business? I would suggest that if your business is not getting a substantial percentage of its business from repeat customers, you are doing something very wrong. Almost all successful businesses operate that way.

i'm saying your logic is flawed...a resi service company needs an average of 3 job/day/man (not estimates, jobs)....for a 240 day working year, thats approx 700 jobs a year....since the average resi customer needs an electrician once every 2-3 years, you wound need a customer base of approx 1400 min to keep 1 truck busy on repeat customer work...and seriously, how often do people voluntarily refer an electrcal contractor? usually only when asked...

the problem is your market niche is not comparable to resi service work...heck cmmrcial service isn't comparable to resi service...

so to answer your question, your theory is wrong for operating a larger, profitable resi service company...you want, and need happy customers....but they won't make your business....

 

[ITO]

I wish we could charge for estimates but in this business most of our competition does not, so I can not... its a free market and so are my quotes.

I just don't quote service calls.

 

[LarryFine]

You got to love it, I had a guy working for me 4 years ago who was always telling me how to run a business. He is currently locked up for not paying his child support.

Well, let's be fair: he never claimed to be a decent human being.

 

[emahler]

I wish we could charge for estimates but in this business most of our competition does not, so I can not... its a free market and so are my quotes.

I just don't quote service calls.

how many of your quotes involve sending a man in a fully stocked service truck to someone's house to give a price for installing 4 recessed lights and a switch?

 

[brian john]

I do a lot of freebies for my customers, good will that I feel has paid off in the long run.

He is currently locked up for not paying his child support.

I had a guy that relocated to West VA as at that time VA and West VA did not have a agreement for dead beat dads. He could not come into VA with risk of arrest, I DID NOT KNOW THIS!

One day I received a call asking about his employment status, I asked why and was told he was a dead beat dad. I gave them EXACT directions to his location. Even offered to drive them there.

 

[wasabivan]

how many of your quotes involve sending a man in a fully stocked service truck to someone's house to give a price for installing 4 recessed lights and a switch?

my answer to that is-almost never. i do the quotes so i drive around in a truck with minimal tools and i dont know any electrical contractors, actually i dont know any contractors period who charge for estimates. im in oregon also. I know roofing, HVAC, Electrical, plumbing, etc. I would love to charge for bids. in fact i spent over a month (not something im proud of) bidding a winery only to have the General fired and a new on hired who wanted bids from my competetors. wish i could charge for my estimating time. i will charge for design build from now on. in the past ive hired contract estimators who get paid win or loose. it didnt take long after several $800 bills to them without winning a job to put the kabosh on that.
business involves taking risks. spending money in the prospect of getting a return of some kind for it.
heres a E-Myth word for you all, "quantification".
go ahead and take your risk. then sit down and quantify how effective that risk was. its like job costing. you need to know exactly how profitalbe it was. if it was unprofitable then either find something else or tweek what you did so that it will work.

 

[mdshunk]

Freebies always tend to bite me somehow, with only one exception. For that reason, I save my freebies for maybe somebody in my church who's in a hard way or something along those lines. Charity, not advertising.

The only time a freebie worked out for me was when I tightened a loose lug in an apartment building main disconnect. It had lights winking for months, and the management company's regular electrician couldn't figure it out. I found the problem within about 2 minutes (as luck would have it, that's the first thing I opened up). I tightened the lug, scheduled to replace it at a later time, and now I get all of that management company's work. Maybe 20-30K gross a year.

 

[emahler]

my answer to that is-almost never. i do the quotes so i drive around in a truck with minimal tools and i dont know any electrical contractors, actually i dont know any contractors period who charge for estimates. im in oregon also. I know roofing, HVAC, Electrical, plumbing, etc. I would love to charge for bids. in fact i spent over a month (not something im proud of) bidding a winery only to have the General fired and a new on hired who wanted bids from my competetors. wish i could charge for my estimating time. i will charge for design build from now on. in the past ive hired contract estimators who get paid win or loose. it didnt take long after several $800 bills to them without winning a job to put the kabosh on that.
business involves taking risks. spending money in the prospect of getting a return of some kind for it.
heres a E-Myth word for you all, "quantification".
go ahead and take your risk. then sit down and quantify how effective that risk was. its like job costing. you need to know exactly how profitalbe it was. if it was unprofitable then either find something else or tweek what you did so that it will work.

apples to oranges...running a resi service company, you may have 5 vans and 15 jobs a day for them to go to. You can't possibly give 15 estimates by yourself, and you really don't want to send a service truck to give free estimates at $3.50/gal +labor.

lets say you can do 4 estimates a day yourself (any more than that, and I assure you that you are leaving money on the table at each one)you work 240 days a year...so you provide 960 estimates a year (my guess is that is way more than you really do)...let's say you pay yourself $50,000 yr total package (yep, you work cheap)...and you spend 8 hrs a day giving those 4 estimates (including travel and writing the proposal)

each estimate costs you $52 in labor +fuel + wear & tear +overhead+ whatever else it costs you...you are easily looking at $60/estimate...if your average job ticket is $500...you immediately lose $60 off of that.

if you close 50% of your estimates, you have to immediately deduct $120 from every job you get. so now you are down to making $380 on a $500 ticket.

or you increase the price to the customer that hires you to $560 to cover the cost of the "free estimate"

either way someone pays....

 

[Tiger Electrical]

apples to oranges...running a resi service company, you may have 5 vans and 15 jobs a day for them to go to. You can't possibly give 15 estimates by yourself, and you really don't want to send a service truck to give free estimates at $3.50/gal +labor.

lets say you can do 4 estimates a day yourself (any more than that, and I assure you that you are leaving money on the table at each one)you work 240 days a year...so you provide 960 estimates a year (my guess is that is way more than you really do)...let's say you pay yourself $50,000 yr total package (yep, you work cheap)...and you spend 8 hrs a day giving those 4 estimates (including travel and writing the proposal)

each estimate costs you $52 in labor +fuel + wear & tear +overhead+ whatever else it costs you...you are easily looking at $60/estimate...if your average job ticket is $500...you immediately lose $60 off of that.

if you close 50% of your estimates, you have to immediately deduct $120 from every job you get. so now you are down to making $380 on a $500 ticket.

or you increase the price to the customer that hires you to $560 to cover the cost of the "free estimate"

either way someone pays....

A good post. I'd just add that when the bids are free you'll get calls from people who won't end up anyone's client because they just want a price for a budget, or find out that all the bids are higher than their budget, or their BIL is doing the work for $75 & they really think he should do it for free, but they'd like to know what a real EC would charge for it. I envy anyone that can close 50% when these people are thrown in the mix.

IMO you need to at least set a minimum job size that you'll run a free bid for. Do you really want to spend two hours running a bid for a $400 job that 2-4 other contractors are called to bid on? I'd rather have two hours to do my hair, grout the shower, or spend quality time yelling at the kids.

Dave

PS The worst free bids I've ever done were for real estate closings. They wanted a real price from a real EC to negotiate the sale price. There was never any shot at real work for real money. I did these for 15-20 years and would be surprised if the grand total of the work I got paid for gas & I know I didn't get minimum wage for my time. I've done my time on free bids. It's someone else's turn. Prospective clients have minimum requirement for ECs, it's only fair to have minimum requirements for prospective clients...like they actually intend to hire an EC for the job.

 

[wasabivan]

I've done my time on free bids. It's someone else's turn. Prospective clients have minimum requirement for ECs, it's only fair to have minimum requirements for prospective clients...like they actually intend to hire an EC for the job.


So i would like to hear from you guys who charge for estimates cause i too have gone to look at work that the caller never intended to give me. like the realtors you speak of.
and Emahler youre probly right, i have 3 guys in the field currently and do maybe 3 quotes a day if im lucky. fortunatley most of our work is for repeat contractors.
tell me what you tell people that call for an estimate. maybe we could turn the tide around here.

 

[mdshunk]

Anything to sort out the tire kickers should be good. The Mr.Electric and Mr.Sparky franchises seem to make this fee about what a typical electrician's service call/first hour would be.